The U.S. Bureau of Economic Analysis (BEA) reported this morning that the trade deficit jumped back up in January to $44.45 billion, the second worst reading of the past eight months. The $6.3 billion increase in the deficit was powered by a $3.7 billion increase in oil imports (to a more normal level, following an unusually low reading in December) and a $1.1 billion increase in the deficit in manufactured goods.
In January of 2010, President Obama set a goal of doubling exports in five years in order to breathe life into the manufacturing sector of the economy and to whittle down our enormous trade deficit, which played a major role in the global financial collapse of 2008. So, three years into this program, how are we doing? Not well. Consider the following:
- Our overall trade deficit has worsened by 20%. Here’s the chart: Balance of Trade. However, the trade deficit has shown some improvement in the past year. But all of that improvement is due to a slowdown in oil imports.
- No improvement is evident in the deficit in manufactured goods. In fact, since January of 2010, the deficit in this category has steadily worsened by 38%. Here’s the chart: Manf’d Goods Balance of Trade. In the past 12 months, manufactured exports have remained flat while imports have risen by 4%. Here’s a chart of manufactured imports and exports: Manf’d exports vs. goal.
- Overall exports fell by $2.2 billion in January and now lag the president’s goal by $33.4 billion, the worst performance since the president set the goal for exports. In fact, this shortfall in exports is now approaching the magnitude of the overall trade deficit.
- Manufactured exports fell by $0.9 billion in January and now lag the president’s goal by $20.4 billion – also the worst performance since the president set his goal.
None of this is a surprise. Exports are determined by foreign demand and neither the president nor anyone else in the United States has any control over that. Imports, on the other hand, are determined by our own demand and by our willingness to allow them in. The United States has total control over the latter (through the use of tariffs), but has made a conscious decision to give foreign manufacturers unfettered access to our market – our own manufacturers be damned. The president and congress could turn this situation on a dime if they were so inclined. But that’s not what their global corporate benefactors pay them to do, and neither has the courage to do what’s right for the American economy and American workers.